Home loan EMIs set to ease, or are they? What banks have done so far

Despite the Reserve Bank of India (RBI) cutting interest rates by 0.50%, most banks haven't fully passed on this benefit to home loan customers, leading to unmet expectations for EMI reductions.

Interest Rates

The RBI has cut interest rates by 0.50% in two MPC meetings this year. With the third meeting starting Wednesday, many expect another rate cut. While this sounds promising for home loan borrowers, the real question is whether banks have passed on this benefit. Most borrowers haven't seen a significant reduction in their EMIs.

Home loan

For example, someone who took a Rs 50 lakh home loan in January for 15 years at 9.5% interest would have had an EMI of Rs 52,211. After the RBI's 50 basis point rate cut, the new rate should be 9%. Ideally, the revised EMI should now be around Rs 50,713 – offering relief of Rs 1,498 per month. However, this hasn't happened for most borrowers. Over 90% of Indian banks haven't yet passed on this full benefit, limiting the effectiveness of the RBI's monetary policy relief.

SBI reduced its EBLR

Among the banks that have made changes, only a few have done so significantly. SBI reduced its EBLR to 8.65%, RLLR to 8.25%, and CRP, effective April 15, 2025. Similarly, Bank of Maharashtra and Indian Overseas Bank reduced their RLLRs to 8.80% and 8.85%, respectively. Punjab National Bank lowered its RLLR to 8.65%, while Indian Bank and Bank of India revised their lending rates to 8.70% and 8.85%, respectively, reflecting only a modest 0.25% reduction.

HDFC Bank

HDFC Bank stands out as the only major lender to implement the full 0.50% interest rate cut. Its home loan interest for salaried and self-employed individuals now ranges from 8.50% to 9.35%. These rates apply from the borrower's next interest reset date. While HDFC's move aligns with the RBI's repo rate cuts, the rest of the sector has largely lagged, disappointing borrowers who anticipated larger EMI reductions.

Financial strain

In short, while the RBI has aggressively cut policy rates in 2025, the benefit to retail borrowers – especially home loan customers – has been minimal. Despite the RBI's monetary easing efforts, most banks have only provided partial relief. Borrowers continue to wait for broader reductions in loan EMIs that will truly ease their financial strain.